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Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates

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  • Klaauw, B. van der
  • Ours, J.C. van

    (Tilburg University, Center for Economic Research)

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    Abstract

    To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once their benefit spell exceeded one year, welfare recipients were entitled to a reemployment bonus if they found a job that lasted at least six months. However, they could also be punished for noncompliance with eligibility requirements and face a sanction, i.e. a temporary reducing of their benefits. In this paper we investigate how benefit sanctions and reemployment bonuses affect job finding rates of welfare recipients. We find that benefit sanctions were effective in bringing unemployed from welfare to work more quickly while reemployment bonuses were not.

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    Bibliographic Info

    Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2010-66.

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    Date of creation: 2010
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    Handle: RePEc:dgr:kubcen:201066

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    Web page: http://center.uvt.nl

    Related research

    Keywords: welfare to work; financial incentives; timing-of-events; dynamic selection;

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    References

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    1. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 1998. "Punitive Sanctions and the Transition Rate from Welfare to Work," Tinbergen Institute Discussion Papers 98-076/3, Tinbergen Institute.
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    Cited by:
    1. Brown, Alessio J. G. & Koettl, Johannes, 2012. "Active Labor Market Programs: Employment Gain or Fiscal Drain?," IZA Discussion Papers 6880, Institute for the Study of Labor (IZA).

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